Cost Inflation Index (CII) for FY 2017-18 and 2018-19 for determining LTCG, notified by CBDT

Cost Inflation Index (CII) for FY 2017-18 and 2018-19 for determining Long Term Capital Gains (LTCG) under Income Tax, as notified by CBDT

CBDT has notified the ‘Cost Inflation Index (CII)’ for FY 2018-19/ AY 2019-20 at 280 for determining ‘long term capital gains (LTCG)’ under Income Tax. Earlier, CBDT has notified new CII at 272 for FY 2017-18 (with CII at 100 for new Base Year 2001-02) as per amendments made by the Finance Act, 2017.

It may be noted that the Finance Act 2017 has amended ‘cost inflation index’ provisions, i.e. relating to indexation for determining long term capital gains (LTCG). The Base year has been shifted from FY 1981-82 to FY 2001-02. The assessees can now exercise option to use Fair Market Value (FMV)/ Indexed Cost of Acquisition for arriving at the figure of LTCG, regarding assets acquired prior to 1 Apr. 2001.

Cost Inflation Index Chart/ Table with base Year 2001-02 (Applicable for FY 2001-02 to FY 2018-19)

SI. No.Financial Year (FY)Cost Inflation Index (CII)

New Cost Inflation Index for FY 2018-19/ AY 2019-20 at 280: CBDT Notification No. 26/2018 dt. 13 June 2018

New Cost Inflation Index for FY 2001-02 to FY 2017-18: CBDT Notification No. 44/2017 dt. 5 June 2017

Relevance of Cost Inflation Index (CII)?

In the case of transfer of short term capital asset, the amount of capital gains can be arrived at by deducting the ‘cost of acquisition/ improvement’ from the ‘sale consideration’. However, in the case of transfer of long term capital asset, capital gains are determined by deducting ‘indexed cost of acquisition/ improvement’ from the ‘sale consideration’.

‘Cost Inflation Index’ basically means the index notified by the Central Govt. with reference to average rise in the ‘consumer price index’, during the year immediately preceding the relevant previous year. However, ‘indexed cost of acquisition’ is arrived at by multiplying the ‘cost of acquisition’ with the change in ‘cost inflation index’ since the year of acquisition or 1 April, 2001 whichever is later.

Accordingly, the ‘Cost Inflation Index’ for FY 2018-19 (new CII) is useful for working out the ‘long term capital gains (LTCG)’ during FY 2018-19, from transfer of long term capital asset, i.e. ‘sale consideration’ minus ‘indexed cost of acquisition/ improvement’.

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  1. Amit

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